COLUMBUS (July 16, 2002) Governor Bob Taft today outlined the
impact on Ohio resulting from the loss of revenue from the Highway Trust
Fund in testimony before the Highways and Transit Subcommittee of the
House Transportation and Infrastructure Committee.

The Governors testimony highlights one of his top federal
priorities to increase the federal transportation funding Ohio
receives. The Transportation Equity Act for the 21st Century,
the current six-year funding bill expires in October 2003. Ohio on
average receives nearly $950 million in federal transportation funds
annually.

"Ohios highways are the crossroads for Americas
manufacturing sector. We cant afford a reduction in our federal
transportation funding at a time when we face the massive task of
rebuilding our states highway system," Taft said. "I urge
Congress to take further action to rectify inequities in the federal
highway funding program."

The Governor told the committee he supports the use of alternative
fuels. However, he explained, the increased use of these fuels will have
a significant impact on federal transportation funding levels if the
current allocation system is not altered. A complex array of formulas
determines the funding each state receives from the Highway Trust Fund.
The allocation of federal funding ODOT receives annually is based solely
on the amount of gas taxes paid by Ohio into the Trust Fund. Any
diversion of these taxes results in less money for the states road
and bridge construction.

Taft emphasized his goal to remove the penalty Ohio and other states
are experiencing for using ethanol. Ohio incurs an "ethanol
penalty" of approximately $150 million. Ethanol is taxed at 13
cents a gallon compared to the federal tax on gasoline of 18.4 cents a
gallon. For every gallon of ethanol sold in Ohio, the state contributes
5.4 cents less to the Highway Trust Fund. In addition, 2.5 cents of the
ethanol tax is diverted from the Highway Trust Fund and placed into the
federal general revenue fund.

Overall, fuel use levels in Ohio have remained relatively steady,
increasing approximately 1.5 percent annually, while ethanol use has
grown considerably over the last decade. In state fiscal year 2000,
ethanol use rose to approximately two billion gallons, up from slightly
more than one billion in 1992.